บทถอดความฉบับเต็มของ *LIVE SHOW* E71: Scaling highly versatile biogas tech, with Stephan Herrmann, CEO of Reverion, and Sebastian Heitmann, Co-Founder and Partner at Extantia Capital.

was not the most easy to understand pitch. Nick: Perhaps a little bit technical. Sebastian: Yeah, it's a fairly complex innovation. But it was also beautiful because we were quite far along. And knowing the energy markets a bit, you immediately realize how big the potential is, actually. But it was not super like walk in the park type pitch. But the technology was there. I mean, that was the interesting part. I mean, they were really far advanced. I mean, they came to us with what, TRL 6 plus or another roughly, yeah? So quite mature, actually, until then funded completely publicly. So that was actually Yeah, I remember quite vividly our first meeting. Stephan: Yeah, me too. Yeah. I don't know. I think our fourth investor meeting overall. Maybe the third one. So we were totally unexperienced. I even remember the very first one we had with UBC. Back in the day, so UBC is actually a fund associated to the university. And so it's supposed to be very, like, spinoff friendly. But in our perception, we were totally demolished by the questions they were asked, because, like, as a few engineers, getting a lot of questions about your markets and so on, like, Why would we know, right? We would build power plants. And yeah, actually, a journal later, they also invested in us. They came back around a year later. and regretted to have not invested initially. Very nice premium for being late. Yeah, true that. So, Extantia. I think that's one of the powers of you guys, to see through maybe that stumbling first steps and see... We've all been there, that's why. And yeah, see through it and see to the sort of core and I think see what the vision of this can be. Nick: Excellent. And I'd love to start unpacking some of the technical complexity of the systems that you actually build. And I think each time that we introduce a new one, it'll probably be good both for the folks sitting in this room and also for future listeners of this podcast to make sure that we're taking a step back and explaining things in terms that are comprehensible. So maybe starting even at the most basic level of when we talk about fuel cells, what are we even really talking about? Stephan: Well, I mean, I can give a lecture on that. But so what is a fuel cell? A fuel cell is essentially similar to a battery in a way, but different. So it's electrochemical. That means you have some kind of ions, so charged atoms in a way, that travel through something. So you have a few layers of materials, and one is especially made to transfer ions from one side to the other of this layer. And then essentially, you feed gas to one side, and you feed air to the other side. And then you have ion transfer between the two. And ions, as they are charged particles, they indirectly transport electricity. And this is the way how fuel cells generate power. It's by transferring the ions, and with that transferring the charge, the electricity, from the fuel to the air or other way around. And there are different types of fuel cells, which the ions have different directions they go. But essentially, the principle is always that. And in batteries, in a way similar, you have the lithium ion that is traveling back and forth. But the differences in the battery, and this will probably become important later, in the battery, you work with the material that's inside. So the amount of lithium that's inside can wander back and forth. But when all has wandered to one side, then it's done, it's empty. Whereas in the fuel cell, as long as you feed gas, it keeps going. So if you have an unlimited supply of gas, you have an unlimited battery, in a way. And yeah, I think when we talk more about the macro of energy systems, that plays a role, because we can build something like an unlimited battery by using fuel cells. And essentially, what's also important is a fuel cell, because of this ion-wandering thing, is actually always also an electrolyzer. Electrolysis is, you know, you put in power and make hydrogen and the same process in principle, you have ions wandering through an electrolyte again, just now as a fuel cell, it uses the natural flow of the ions. like it goes from a high concentration to a low concentration of this material, like hydrogen. So hydrogen will travel from its high concentration to its low concentration side of the membrane, and you can essentially then try and force it in the other way. And that's when you do electrolysis. So you essentially force the hydrogen to go from the low to the high concentration by externally pumping in a power and that's electrolysis. And that means you can use the same thing, the same layer of materials to do both. And that's essentially the principle behind it. Nick: Yeah. And I'm going to reintroduce the same market question that perhaps UVC stumped you with back in the day. But I think, you know, to make this iteratively kind of appreciable, we can talk obviously more about the innovations in the fuel cells themselves, but when we think about sort of the real world applicability and some of the customers that you're now working with, let's talk about that sort of in the market terms and introduce folks to, you know, for whom is this actually useful and for whom does this make an impact? Stephan: Yeah, so the fuel cells and actually what you need is not a fuel cell, you need a system, right? So you have to put a lot of things around it to actually make it work that makes the fuel cell have the good gas supply and so on. And yeah, so the fuel cell system, first, because it's electrochemical, it has higher efficiency. So it can convert more of the input energy into power, meaning if you have a limited resource like biomass, biogas, then you want to use that to maximum efficiency. And that gives you more power from the same input. That's one thing. And the other thing is that, yeah, since you can operate it in reverse, it's a totally different thing compared to any combustion engine or so where you just

put in like gas and air and you burn it. But yeah, you can't really use it the other way. When we talk about energy grids, then we see now transition to a lot of wind and solar. Sometimes you have a lot of power that you don't even need, sometimes you don't have enough. And it's turning out to become something like half the time each. So when you talk about customers, like our initial customers now mainly with biogas plants, they should actually only operate half the time making power because this is one of the few sources of renewable energy that you can actually use in a dispatchable or controllable way. And so you want to concentrate the power generation from the biogas onto this like time when there is not enough renewable and The other time, they don't do anything, meaning also they don't earn money. And now when we come in and replace that traditional combustion thing, then now the other time when there is too much power, meaning typically it's also very cheap, like daily we typically have in summer already zero to negative power prices. And then now they can turn around, use that excess power from the grid, and make valuable green gas through the electrolysis, meaning to open up a totally new revenue stream. So they earn more from the power because they make more, and they can then use the normal downtime where they don't earn anything to now make more money, taking cheap power, making it a valuable green gas. Overall, that stacks up a lot. So for a given biogas plant, we can typically up to 5x the revenues. And their limitation is actually how much biomass feedstock they have, how much gas can they make. And so that's the limitation. And then normally that caps revenues. And now you can 5x. rare value proposition. And so that's also where all the interest for our technology is coming from. Nick: Excellent. So this will be the point where I step in and try to do some of my summary duties. But at the highest level, I think part of this conversation centers around a fundamental shift in how power grids have operated historically. So 20, 30 years ago, you had a reasonably centralized model of generation where there were a number of large power plants, be they based on coal or natural gas or even nuclear fission, and those typically could generate power pretty consistently a lot of the time, up to 80, 90, even 100 percent uptime. Now we're moving to sort of more of a decentralized and convergent model where you see a lot more intermittent generation sources like wind and solar being added to grids, which is a good thing because it helps reduce greenhouse gas emissions and can help save costs on fuel. But to his point, it introduces a new dynamic where some of these resources are not necessarily dispatchable in the sense that they're not always on. You're sort of at the mercy of when the sun is shining or the wind is blowing. And so as a result, the ability to then use other generation sources that are dispatchable, such as biogas, when they're most needed, which might be when the wind is not blowing and the sun is not shining, and the ability to then also valorize them when biogas might not be needed because there is a lot of wind and solar. All of that becomes a lot more critical in order to sort of make this integration of new energy generation sources. pencil economically and also make it maximally efficient in terms of reducing greenhouse gas emissions. Good summary, things you would add to it? Sebastian: No, absolutely. That's totally right. I mean, this is the challenge that the grid's facing today, and we need answers or responses. I mean, I think we're there and this provides this kind of, if it had to dream up a perfect reactor, how it should look like in the grid, this would become pretty close to it, yeah? Yeah. That does the prosumer and consumer at the same time, yeah, and can switch around in seconds to be between the two modes. Not that it's necessary to switch around in seconds, but it would be, could. And that's really a beautiful innovation. And you mentioned the search for, I think the grids have evolved from now. We see a lot of volatility in the grids because of the intermittence. And we need answers. And biomass is certainly one that has not gotten recognition. And that's maybe didn't put up to the five times economic benefit for the owner of the asset, but also really results in quite affordable, but dispatchable energy. And previously, biogas was rather on the expensive side and only worked with subsidies on the markets. Feed-in tariffs was a common way to subsidize. And that's why it wasn't proliferated in many other nations that have a lot of biomass. But they simply don't have any feed-in tariffs. If you look into Argentina or, I don't know, a place with a massive amount of biomass, they're not using it at all or very scarcely because it's simply economically unviable. You're producing it what 16, 20 cents per kilowatt hour euros or dollars. That's not a very attractive price these days. When you have wind and solar and a grid at four, five, six. Yeah. Nick: And it feels like a good opportunity to make sure that we're also bringing everyone along for the ride and maybe talk a little bit more about what biogas is, even, you know, how it's produced. And I think also, perhaps, to point to some of the differences in different geographies, because, I mean, I'm German as well. I think we've got three German folks sitting up here. And so I grew up going to Germany a lot as a kid, and even at that early age, I sort of grokked that, oh, there's this thing called biogas out here, and I see it a lot more in Germany than I do in California, where I was growing up. There's always been, or traditionally has been, a lot more biogas in Europe than there has been in the U.S., and there's some catching up being done in the U.S., but yeah, maybe we can talk a little bit about what biogas is, what a normal plant looks like, and then we'll get back into the

conversation around how you're helping them accelerate their operations. Stephan: Yeah, so biogas essentially is rather low tech, actually. It means, how did it start? It started with farmers having cows and so on, cattle, and the manure and so on that was produced or is produced by the cattle is essentially what was just stored in the open. And while that is then naturally degraded by bacteria and so on, it emits a lot of methane. And yeah, at some point people came to the idea, okay, let's just put a cover over it in a way and collect that gas and Yeah, instead of emitting the methane, you can actually burn it and use that energy for heating, for power. And so that's the original idea of biogas, where it came from. And that's why it's really low tech. It's like, in a way, the natural process of decomposing manure and so on. And it evolved over time, extending feedstocks. So people started to put also agricultural residues in there, food waste. And now it's really a broad range of feedstocks that can be used. And on the sort of evil side of it, if you want to call it, there's the energy crops, so dedicated growth of crops that is then fed to biogas. And that has sparked, of course, a big discussion about land use and things like that. Is that actually the highest and best use of those crops? Yeah. Exactly. But now things are getting back to the more original idea, step by step, by really trying to employ more waste materials that are otherwise just dumped somewhere and degrade that. And it makes using it more complex, because maybe they're not as easy to decompose as corn. But yeah, the industry is learning a lot, I think. And Yeah, it has sort of had its bad times in a way, going through a hype with all the energy crops then declining in Europe, especially Germany. But now I think it's really coming to a state where it's becoming really sustainable. using waste materials. And yeah, now we are trying to add the part with using the biogas really to the best extent possible. And then finally, you have a really neat component of the energy system. Right. Nick: Yeah. And what I'd add really quickly for additional context, and you know why I think biogas is an interesting area to focus is I think over the last five years, within the broader climate movement, there's been a lot more recognition of the need not just to focus on carbon dioxide emissions from things like power production, but also to focus on methane emissions, which are also a greenhouse gas and drive a lot of short term warming really quickly. I think, you know, the headline status that Methane has driven something like 25 or 30% of all global warming to date, and yet it gets only about 1% of all climate finance. So biogas, when done well and also made more efficient with processes like yours, can be a really good way to, you know, my little tagline for it is keep more methane on Earth and out of the atmosphere and make better use of it, because when it's in the atmosphere, that's

one of the worst places in terms of a global warming impact for it to be, and it can also be a very valuable resource on Earth. Sebastian: Absolutely. I totally agree. I mean, we want to make the best use of the methane. And I think on that question is a bit not so sure where all the methane emissions come from, right? That's a bit of a problem. And it's probably a lot of it comes from leakage of oil and gas, from not properly decommissioned old oil wells and gas wells. But yeah, that's a bit of a question where really, where is the big leakage? But I guess in his process, at least we avoid the leakage that did also occur in the production of biogas. We're using traditional internal combustion engines. At least we also completely curb those emissions. Yeah, that's at least good. Makes sense. Nick: Yeah. And so I'd love to, you know, now we can talk a little bit more about sort of the journey that you've been on perhaps more recently of commercialization and bringing this technology to market. So when you started approaching some of the first, you know, biogas plant operators with whom you wanted to work, like what were some of those early conversations like? Did it take a lot of convincing or was it pretty easy to show them the tech, show them that it was working and get them on board? Stephan: Well, actually, many reactions were and are like, where have you been all that time? We've been waiting for this. Yeah, really, like the first people we met, for example, the guys operating the BIOS plant where we are piloting. They were like, this is what I've been dreaming of all the time, how to maximize the use of my biogas plant for the energy system. Because although they are often disregarded by politics, actually, the biogas community people, they feel like they really want to make a contribution. And they invest heavily in their plants, even though maybe economics are not that great or even uncertain in a way. So yeah, I think. they are really added with their hearts. And so we got a lot of really emotional reactions on it. And yeah, also funny thing, when our sales team went to the first Biogas Congress, and they got really swarmed by people. And afterwards, they send like a GIF image in the team's chat where like, you see a somebody feeding some fish and then all the fish are jumping on it and even falling out of their basin. I'm like, this is product market fit, right? So I think we really nailed that one. But of course, the true work is delivering, right? You have to deliver plants and they have to work well and so on. So I think that's the bigger challenge we have. Sebastian: That's a challenge ahead. But a quick comment. I mean, this product market for the Varian is exceptional. And it's also maybe a reminder to all the innovators out there, this is how true innovation looks like. They're actually producing a product at a green discount from unit one onwards. So they're not depending on any subsidies, taxes, and whatever to get there. It's simply on day one, the economically most viable solution. That's when you get this. fishpond syndrome, right? Yeah. And that's really something sometimes we say in our, internally said, if you're not innovating at green discount, you're actually not innovating at all. Right. Because that's really the central unlock to scale. Nick: Yeah, makes sense. And you know, this strikes me as a good opportunity to maybe, you know, one more time, we can walk through step by step, when you plug in with a biogas operator, sort of the different components of the tech stack, because I know that there are a number, and how you help them. And then once we've sort of charted step-by-step of like, this is what our system does, and this is why it's valuable, then we can start to zoom out again and talk about macro things, and energy, and industry, and whatever else we want to talk about. Stephan: Yeah, sure. So the farmers will feed their biomass into that. It decomposes. It's a brownish soup bubbling. It's not very nice to see and it doesn't smell very good, but it's a valuable source of energy still. And then you have downstream of that, you have like a gas cleaning system oftentimes, and then you have a combustion engine. So the gas is cleaned and then it's burned in the engine. The engine is something like a diesel engine, just converted to use gas. And yeah, that burns it, sometimes quite uncleanly, as Sebastian mentioned. So some methane can slip through and get vented to the atmosphere with the off gas. And yeah, then that engine makes power. And then it goes to the grid. And it doesn't really do that well. So efficiency is low. And it generates a lot of heat. Sometimes the heat can be used. Oftentimes, it's just useless. And then, yeah, that's the current setup. And so where do we come in? We don't touch any of the biology. We do, if necessary, upgrade the gas cleaning, because our system needs fairly clean gas. So that means we might have to add something to the gas cleaning. And then we essentially replace the engine. So you can consider it a drop-in replacement. I mean, for now, initially, we are rather adding on something, like a second piece to it. But finally, we'll just be replacing the engine. And so our system takes the gas, and then going back to the operation, so it makes power when it's set to do so from the biogas. And that means it takes in the biogas, and it's processed inside to be ready for the fuel cells. Then it goes for the fuel cells, it's converted. And what comes out of the system is actually, in our case, rather pure CO2 stream. So we are not emitting that valuable green carbon that's in the biogas to the atmosphere. It's actually a pure CO2 stream that you can fairly easily keep and liquefy. And that essentially makes us also a BEX power plant. So bioenergy with carbon capture. So you have the option to not lose the green carbon that comes out. And so that's another valuable thing that we can do. And yeah, then it

makes the power from the fuel cells and that goes to the grid. And well, then when the grid has a lot of power, the thing we do is we reverse the fuel cells. So we use battery inverters in between the fuel cell and the grid. So the same thing as with a lithium battery. And you can control that to either feed power or take power back. And so when the system is set to use power from the grid, the inverter will just change the voltage of the fuel cell, meaning that it will now pump in the power. And in that case, we use water and the power to make hydrogen, meaning the system consumes some water and internally actually some things happen like the water is evaporated and fed to the fuel cell and there it breaks down into hydrogen and oxygen and the hydrogen comes out as a product. Or we can even, and that's the beauty of biogas, use co2 that's also part of the biogas but i guess it's rather like half methane half co2 and that's very valuable when we run electrolysis you can use the co2 part of the biogas together with the hydrogen and we can internally make methane and that means we can actually make a renewable natural gas substitute. So finally, if you push that further, you can end up with having twice as much methane that you feed to the gas grid than you originally had biologically. So we can upgrade the whole biogas, everything into methane. Yeah. By, of course, adding energy from the excess power. Nick: makes sense. Yeah, there's a lot going on, so I'll do my best to summarize again. But, you know, what strikes me as one of the more sort of salient innovations here is that, you know, at the most basic level, you can still do what the biogas plant is originally designed to do, which is to deliver power to the grid. And you make that process in and of itself more efficient, and you also ideally reduce the leak rate of things like methane. So in and of itself, that has a greenhouse gas mitigative potential. But the ability to also switch, you know, in a case where the grid is already well supplied with wind and solar power, you can sort of dynamically, again, invert and then create green hydrogen or an upgraded stream of green methane instead. And so that sort of dynamic ability to switch strikes me as one of the most important sort of innovations here. Returning to the conversation we originally had about, you know, grids these days don't always necessarily need excess power. There are times where they actually have plenty of it. And so you would like to also still be able to do something during those times. Sebastian: Yeah, yeah, absolutely. First, I mean, one point to add, I think, is the methane, we have an existing grid for methane, so we can leverage and utilize existing methane grid, which is gigantic. And it really serves as a very beautiful, simply and widespread source for long duration energy storage. One of the things we liked a lot, the utilization or leveraging of existing assets. Nick: Right. Yeah. And really quickly, again,

for folks who might not be as embedded in these conversations as we are, when we talk about hydrogen and the value of that, maybe we can really quickly just talk about why hydrogen is important, why green hydrogen especially is important, what the value of that is, what the markets for that are. Stephan: For sure. Controversial. And also from our customer side, maybe I'll start there. When we talk to customers and we explain to them what the system can do so that it can also make hydrogen or methane during the electrolysis phase, which is the new part for them, because making power for biogas is what they know, then they say, OK, but who wants my hydrogen? So actually, 95% of them are looking to make methane. Sebastian: Decentralized green hydrogen is also a bit of a problem, to be honest, in smaller quantities. If it's in large quantities, you have an offtake next to it, then yes. But a few megawatts somewhere in the countryside, with all the challenges that come with getting it anywhere, are not the most beautiful solution. That's why methane, that's a way easier to store and transport gas, makes a lot more sense. Stephan: For sure. I mean, I personally at least believe that the switch will come. And I mean, our systems are ready for it. They can make one minute methane and the next one hydrogen. So it's just whether you feed CO2 to it or not during running the electrolysis. So that works. Now, at least around Germany and probably other places in the future as well, politicians are now starting to evaluate transitioning the gas grid from a methane to a hydrogen grid. And there are some test regions already and potentially like in the next 20 years, larger portions could be transferred into hydrogen. And then suddenly collecting hydrogen decentralized through the gas grid can be a thing. Sebastian: Once the gas grid's ready, H2 ready, as they say, then of course, once the gas... Then it doesn't matter anymore. And the benefit is... But you're still utilizing an existing grid, right? Yeah, for sure. Stephan: So it's an H2 ready... Yeah, so the grid is the important factor, right? And we need to make what the grid needs. And there's oftentimes a problem of the hydrogen... community in a way that, yeah, what to do with the hydrogen, right? You have to really locate with a customer, but that can have its disadvantages as well. Because actually, you would like to distribute the hydrogen generation to use the sort of dispatchable power aspect of it to stabilize local grids. But now, if you co-locate huge hydrogen electrolyzers with industry, then you actually have, again, huge plants and maybe constraints on the power grid, and you are not really balancing the local grids. And this is a problem which we think we solve well with making the methane and indirectly transporting the hydrogen as a methane molecule. Nick: Zooming out a little bit, we're talking at a very exciting time. I think just a couple weeks ago, you all announced Series A.

That was one of the larger Series A I've seen in climate recently. I think it was in USD terms probably close to $61, $62 million. So I'd love to just talk a little bit about what the most recent fundraising process was like and also what the use of funds will be, because it feels like that positions you really well to scale up and commercialize a lot. But that's just my assumption. So I'd rather hear it from you. Stephan: Yeah, of course, I mean, yeah, we are really happy with that round, also with the investor setup. I mean, first of all, the huge support from our existing investors really helped us cause a lot in the fundraising also, because it wasn't the best time to raise this kind of a round, like with the whole macro situation of fundraising in a way. So we're really grateful for all the help and support we got, and also for the big part of the round that actually came from our existing investors. And yeah, we were also fortunate that we had a lot of interest in the round. So we actually had to postpone quite a few very good potential investors, very interested ones, telling them, yeah, let's look for the next round. That's a good problem to have. Yeah, but also our lead investor now, EIP, and at Colette by Extantia, actually. And also Honda, I think, and the EU with the EIC fund. We were fortunate to really set up the consortium we wanted to. And it's all, of course, based on the huge customer interest, which I think is the fuel for fundraising a Series A round more than anything else, I would say. Yeah, so now with EIP, essentially a fund that the whole LP base is utilities, like people that actually buy and operate power plants. For us, it's, of course, one of the really prime investors. And then we also onboarded Honda, car maker, which might sound surprising. But when you look at what our target is to mass produce power plants, really in a way, finally similar to a car industry, high automation, high throughput manufacturing, then that's why we brought them in. And of course, we are a European company. So it's always also for us, important to have that angle. And so we're also happy to have the contribution from the EIB, the European Investment Bank through EIC fund. So I mean, scaling up infrastructure and so on in Europe, they can play a big role. And we're hoping to really leverage that as well. So yeah, we're really happy with that round. And also, of course, the size and utilization of funds. Yeah, the main thing we look at is to try and fulfill our customer demand. So yeah, Yeah, getting ready to series produce our plants as quickly as possible and then start doing that. That's the main target of the A round. Nick: It feels like a good time to check in and see if anyone in the audience has any questions. I don't think the mic will pick it up, but I'm happy to repeat it if anyone has a question they want to ask at this point. Otherwise I can keep drilling down. Yeah, please. SPEAKER_02: You know, hydrogen and different gasses on site, how do you manage the logistics of, you know, trying compression, storage, all that kind of thing for transport, and then how the transportation costs of some of these remote areas, you know, I know, transportation costs a huge component of the cost of CO2, for example, and other gasses, right, anything, anything that you're moving on the road. So transportation and distribution, Nick: Yeah. Really quickly, I'll repeat the question just for the mic's sake and I'll do my best, but in terms of the production of all the various gasses that are part and parcel of the system, be it CO2 as something that's potentially captured and then also utilized and sold, or hydrogen or the methane itself, when we think through the transportation and the logistics and the potential additional infrastructure needs that that can introduce, how do those factor into all the various kind of calculations and complexities that you're already navigating? Stephan: Yeah, very important question. We also hear that quite often. And the answer, it depends. Depends a lot on the setup locally. So it first of all depends for the CO2, for example, does the customer want to use it or sell it? And there's two options. I mentioned it previously, you can make a setup where you finally end up with all methane output. So you don't have any leftover CO2. But you can also tune the operation of the system to having quite a bit of CO2 that you can actually then sell. So these are different options, which are not related to our system itself, but the way the customer wants to do it, to operate it. And then that depends on what they have to add or not. So let's start with the methane gas. That's sort of straightforward. You have a gas grid connection that is typically set up by the grid operator, actually, at least around Germany. By law, they have to do it. So you apply for a gas grid connection, and they will build that feed-in station. And they have to build it according to the requirements of the plant, actually. That's a big plus because the customer doesn't have to care about that. And even that feeding station has to dry it and so on. So actually it can be used as it comes out of our unit. It's probably different for other countries and it can vary a lot, but that's our current setup in Germany. And then the CO2 part is sort of the more dependent one. If you want to use all the CO2 finally, then you need some intermediate storage only. And that means typically, it's very common to restore gas in biogas plants already, because they operate the engine half the time, meaning the other half the time biogas is still produced, but it has to be stored somewhere. And they do use these big domes like with foil gas storages and you can actually use the same method to immediately store CO2 and for reuse. So not even needed for any compression. You just have a big volume, a big bag that you inflate with CO2. and deflate. And so that is a fairly straightforward thing. Now, it

becomes more complex if you want to actually sell the CO2, because then you have to transport it, as you mentioned. And for that, you typically compress and liquefy. So CO2 has advantageous properties that will become liquid at around 60 to 70 bar at ambient temperatures. So you need to compress it to that level, and it becomes liquid. Sometimes it's also cooled, then you have less compression. So that's the way to make it transportable. But for that, you need a setup of compressors and a heat exchanger to cool it down and so on. And you can buy that from different suppliers, but it costs some money. And yeah, so. But actually, we leave that more or less up to the customer how to actually use that CO2. And we don't build the liquefiers or anything, but it's something that they can buy. And depending on the size, it has very different economics. So at very small scale, it doesn't work. But if you go to a certain larger scale, then it works well. So it really depends on the size of the biogas plant overall. If they already have a biogas upgrading unit and produce a lot of CO2, then our CO2 is just blended into that. That's actually a common setup for our first customers right now. Or if they don't have anything yet, then it's also an option to just emit the CO2. So it really depends. And hydrogen, as I said, is something that people say, yeah, could be interesting at some point, but I'd opt for the methane now, so. SPEAKER_04: A bit of a linked question, if I can. So you spoke about how you want to now mass-produce power plants, and also a little bit about the complexities of actually transportation as well. Can you speak to the ideal locations from a customer's perspective, as you're hearing it now? Nick: Yes, just to reiterate the question really quickly for the audio, the question was largely around siting and what types of locations and potential customers are ideal for you as you can continue commercialization. Stephan: Yeah, so the ideal customer setup and the ones that we are also looking for, our first plans especially, since we have quite some interests we are able to choose, which is very good, is something where a lot of the infrastructure is already in place right now. So we have people that, as I said, operate an upgrading plant already, have some CO2 logistics in place so that we can also display the full potential of the technology already now. And of course, I mean, the footprint of our units is very small. It's a shipping container. So and it doesn't itself need much around it. So it can be placed fairly easily around biogas plants. There's some consideration with explosion zones and so on. But in general, it's fairly unproblematic. Yeah, I hope that answers the question. Excellent. Nick: Yeah. SPEAKER_02: How efficient, how much more efficient is your system, your fuel cell system, generating power versus the diesel generator? If you're generating the same amount of power, to pick an amount of power you want to generate,

does the diesel generator use 10 times more gas, five times more gas, 20, 30, you know? Nick: Yeah, so the question's around how much better is your system in terms of efficiency, converting that biogas into power or other valuable product? Stephan: Yeah, so we are aiming for our series product to achieve 80% efficiency, like power generation efficiency based on a low heating value basis for the people that are more into it. And that is typically roughly double of what the combustion engines will do, which means it consumes half the gas for the same power. Yeah, that's extremely revolutionary, actually. So the best power plants in the world today do a bit more than 60%. But these are huge, huge gas-fired power plants using natural gas. Combined cycle. Combined cycle, yeah, exactly. And hundreds of megawatts. And the engineers designing those turbines, they typically fight for 0.1%, 0.2% improvement per year. spending billions on materials research and things like that. And so somebody coming in and say, we'll do 80. When we speak to people in those industries, they oftentimes didn't even believe it. But it's really it comes down to using those fuel cells and that system design that we have created. That's the core of the process engineering that's inside of it. That's where this is coming from. Sebastian: We also didn't believe it initially. Nick: I think we might have had, were you going to ask a question? SPEAKER_03: Yeah, I was going to take it back to the outputs and the reverse use of your systems and ask if the green ammonia conversation is one you're hearing from your customers, particularly given the agricultural use case of where you're sited. Nick: Excellent. Yeah, so the question was around whether there's interest, especially considering that a lot of the folks with whom you work already operate in the agricultural sector. In terms of the other gasses that you're able to generate, whether there's interest in producing green ammonia as well? Stephan: We've been asked for that, but making ammonia is a different game compared to making methane. We operate our systems at low to mostly no pressure, overpressure towards atmosphere. And you can do methanation pretty well with that. You can't really make ammonia. So for ammonia production, you need hydrogen and nitrogen, actually, which we're also not making. So just from a tech perspective, it's not straightforward to do it. It can be done, but it's a big capex. at small scale, so it's not ideal. You'd rather want to use a very traditional ammonia plant and just use the methane that we produce, route it through the gas grid, collect it from hundreds of our plants, and then make ammonia. But buying the renewable methane, I think that's way more efficient than decentralized production of ammonia. Sebastian: We've actually seen on the innovation side, we've seen some decentralized containerized solutions for ammonia production. So there might be also innovation coming that route. Stephan: Okay, I mean, with innovation, for sure, but we are not working on it. Sebastian: Yeah, no, it's not you. Stephan: But of course, we would be the sort of upstream to that, just essentially handing over some hydrogen. Then that perfectly works if they can make the economics work of that. Perfect, but it's not our part of the game. Nick: Excellent. Well, I think we're already closing in on time, slowly but surely. So I'll try to ask at least one more question, and then maybe we can zoom out and talk about other things that are interesting to us in climate and energy really briefly. But it occurs to me that sometimes I don't push my guests hard enough and ask hard enough-hitting questions. So I'll do my best to end on a question in that vein. At least from the US perspective, when I think about power generation and this move to a centralized grid, we don't hear a lot of conversation, perhaps because there haven't been the right innovations. biogas is not as big of a market in the US. And in the US, there's a lot of focus on solar and battery energy storage, or even restarting old nuclear power plants that were previously decommissioned. So there's a lot of competition on the power generation side. So I guess, especially if you look at other markets in the future, what makes you confident that your solution has a role to play alongside a lot of these other technologies that are also improving and iteratively becoming better? Stephan: Well, I give you a short take and maybe Sebastian can expand on it. So to my knowledge, the US has 8000 operating biogas plants roughly, which is not nothing in terms of a market size, because also especially they are bigger. So just from a really rough estimate, that should be at least 100 to 150 billion worth of plans to deploy. So it's an existing market. And as far as I know, from numbers of the American Biogas Association, this is supposed to be growing quite substantially. So I think there is a substantial market already. And yeah, I think, as you mentioned it previously, I think there were awareness is just coming up in many markets and that there are waste materials that can be used for biogas and that there is the intermittency and that you want to actually not operate base load nuclear all the time because that competes with the cheap, it doesn't compete really well with the cheap solar. So in the time when there's big solar, then you wouldn't want to at least produce power from natural gas because you lose money on that. Every hour there is the solar. So yeah, intermittency thing is just coming up in many countries, which in Germany is just earlier right now, where we also see the effects already. So I think this is something that will evolve and there will be more of it, not less. And again, the market is already sizable, so I think we'll be doing fine also expanding to other regions. Sebastian: So Nick, this is exactly the question we asked ourselves as well. And we actually ended

up doing a study on it, hiring some smart consultants a few months ago to look into that. What's the role of biomethane in a future grid? And how does that stack up with the idea of using green hydrogen as a grid balancing technology or any other technology. At the end of the day, we need some type of dispatcher renewables to come in. There's not that many options. Geothermal is an option. Some depends on where you are, some tidal energy or some stuff like that could be an option, but it's rather limited. And then there's biomass that kind of has all these characteristics. of fulfilling the needs of grid. Decentralized, dispatchable. But what it didn't have before was cost. And so now innovation comes in and brings it in at cost. And that is quite an interesting game changer. So our study showed that we could produce biomass at roughly 75 megawatt hour in combination of a few different technologies. So not only Bavarian, also some other improvements which are coming to the market too. Right. And that's a very good price to be at, to be honest, if you are dispatchable. Because that is most of the times cheaper than wind and solar. Depends on how long you store solar and how long you store wind. But it's oftentimes cheaper. But again, it's not about competing with them. It's about balancing them out. Because if you don't need to store them, then they're cheaper. And that's what we won't get to. And there's also, of course, biomass is naturally constrained by the amount of biomass we have. Yes, we are seeing a lot more different feedstocks coming in. All waste feedstocks, Stephan made it clear early on, that's the only thing we look at is waste feedstocks. We don't want to have any energy crops, any arable land discussions. That study, in the end, showed quite some significant results. We modeled two different countries, one with Germany, one with Netherlands. And for Germany, for example, it ended up showing that we can save roughly about 300 billion euros in energy transition costs. by using existing and upgrading existing infrastructure. It's also a big point, not building all the infrastructure new, because the other answer would be to build an enormous amount of windmills. We're actually saving about 70,000 windmills that we don't have to build, plus all the electrolyzers that go alongside with it to create that green hydrogen, which is still by far not enough that we would still need to buy a lot from other places which have more solar and import it. I think only 30% of hydrogen required for the German economy could be sourced on site. Plus, we need to build all the infrastructure, the grid to move, you know, the wind energy or the hydrogen from the north where it could be created where there's more wind to the industrial centers in the south. So there's a lot of these complications that we did. We hired consultants who are much smarter than we are to really understand that and they modeled it for us and the results were quite staggering. I would even say the energy transition as it's currently planned is undoable. And those technologies make it doable. Again, not alone, there will be other technologies coming as well, but that's a really significant stepping stone and hopefully becomes a role model for many other countries that have good access to biomass that is currently being unused. A good example is Spain has the most agricultural waste in Europe. It's basically not using the technology at all. Very few plants today. tremendous potential to and has a lot of solar and wind. Yeah. So for them, it's really a close to ideal solution. And Stephan just mentioned also the other complexities of dealing with this expensive nuclear on the grid, which you have to run continuously as a base load, and you're overpaying a lot of hours of stuff you do don't really need. So that's the things really, maybe the important part of it. And anything else, to be honest, highly unlikely to work. I mean, just continuing, just building out intermittents without grid balancing is not a great path forward. Nick: Yeah. Well, that's the best part of my job. I'm constantly being challenged to update my projections, so I probably wouldn't have come into this conversation expecting a 5 or 10 percent role of biogas on the U.S. grid in the future, but maybe I should think differently about that. So I appreciate that challenge. Really quickly, lightning round, let's talk about what's something else in climate or energy that you're interested in, captivated by, completely perhaps outside the realm of the conversation we've had so far. Stephan: I was at the carbon removal summit in San Francisco like one and a half weeks ago. And I think, yeah, all the carbon removal is really picking up right now. So I think, I mean, we are into that as a side effect in a way, but I think this is something that's coming big. And that's exciting. I think big projects coming. And so yeah, and it's something that we'll need. We can't really do that with biomass alone, I think. So yeah, there's in the next 20 years, I think a lot of things coming. But of course, I mean, technology wise, there's so much happening everywhere. So I could talk about 1000 things. But no, I'm especially I like the new generations of the Air Capture, way better than the original ones because of now they have a reasonable cost protection, I guess. For example, the new portfolio company. Sebastian: Advertising our portfolio, thank you. Stephan: Yeah. Phlair, a fellow founders from Munich, really nice guys and they do a great job. Nick: Excellent. I like that. A good one for folks listening in to maybe do their own research on Phlair. P-H-L-A-I-R, right? Yeah. Sebastian: I was going to say carbon capture, too, but you took that away from me. But I think there's a lot of beauty. We saw so many interesting technologies. And it's not only tech, it's also, of course, execution plays, where we just need to roll out smarter, bringing down cost of capital

to really scale industry. But in terms of quite novel spaces, I mean, yesterday I was here at the New York Climate Week at the geothermal house. Quite impressive what's happening in that space. And that's obviously a really interesting, like I said, dispatchable energy source. There's a lot of innovations. I think everybody's from Houston, it seems like. So is Houston coming to New York for a weekend? Nick: The Fervo Energies of the world. Sebastian: Yeah, Fervo has shown some very impressive numbers lately, where you can really say we can actually produce geothermal at very competitive costs in many, many locations that were previously not done. And then there is another, I think, 18 companies yesterday that showcased their alternatives as a company out of California, drill at a volcano now, the first supercritical so-called geothermal. Well, that's quite the daunting challenge. I'm happy to see them succeed. Yeah, that's kind of the holy grail of energy. If you really end up doing supercritical geothermal, then you're producing at extremely low cost energy. So that's an interesting one to watch. We are hosting actually tomorrow also geothermal roundtable to discuss a few of these implications. One thing that we found lately is not really gotten too much limelight yet, but has potentially quite interesting implications is the role of geological hydrogen. We talked a lot about hydrogen today. That's natural occurring hydrogen. And there's different plays. There's companies like Coloma here in the U.S. that do it basically in an exploration base, similar to looking for oil and gas in the past. A lot of similar skill sets, too. That's one way. The other way, more daunting, so-called orange hydrogen, that's actually sort of stimulated geological hydrogen. So they're creating it on-site, on-demand. They're also not looking for it. That's quite interesting. In general, It's something that I think we will look back in a few years and say this is one of the biggest innovations that we found, because it moves hydrogen away from being an energy carrier to being actually an energy source. And that's quite a big shift. I think in our generation, we will not find necessarily a lot of new energy sources like this. Nick: Right. Yeah, quite interesting. All right, well, I think we've already probably exceeded our time. You know, probably could cut a lot of stuff. I said, yeah, we could probably speak for another two or three hours. There's always all kinds of different things, but I'm glad that we were able to hit on things from across power generation to hydrogen and agriculture. And yeah, thanks so much for the time. And thanks so much for the audience for being here to ask really sharp questions and listen in. I think that'll do it. Yeah. Stephan: Thanks so much for having us. Nick: Thanks for tuning in. So you don't miss the next episode on another cutting edge climate tech. Make sure to subscribe on Spotify, Apple, Google or wherever it is that you get your podcasts. We'll see you soon.